Correlation Between Emerita Resources and York Harbour

Can any of the company-specific risk be diversified away by investing in both Emerita Resources and York Harbour at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Emerita Resources and York Harbour into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Emerita Resources Corp and York Harbour Metals, you can compare the effects of market volatilities on Emerita Resources and York Harbour and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Emerita Resources with a short position of York Harbour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerita Resources and York Harbour.

Diversification Opportunities for Emerita Resources and York Harbour

-0.42

Correlation Coefficient

Emerita Resources  York Harbour

Very good diversification

The 3 months correlation between Emerita and York is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Emerita Resources Corp and York Harbour Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on York Harbour Metals and Emerita Resources is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Emerita Resources Corp are associated (or correlated) with York Harbour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of York Harbour Metals has no effect on the direction of Emerita Resources i.e., Emerita Resources and York Harbour go up and down completely randomly.

Pair Corralation between Emerita Resources and York Harbour

Assuming the 90 days horizon Emerita Resources is expected to generate 15.03 times less return on investment than York Harbour. But when comparing it to its historical volatility, Emerita Resources Corp is 5.92 times less risky than York Harbour. It trades about 0.03 of its potential returns per unit of risk. York Harbour Metals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  5.00  in York Harbour Metals on September 3, 2024 and sell it today you would lose (1.94) from holding York Harbour Metals or give up 38.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Emerita Resources Corp  vs.  York Harbour Metals

Emerita Resources Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Emerita Resources Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Emerita Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

York Harbour Metals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in York Harbour Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, York Harbour reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Emerita Resources and York Harbour

The main advantage of trading using opposite Emerita Resources and York Harbour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerita Resources position performs unexpectedly, York Harbour can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in York Harbour will offset losses from the drop in York Harbour's long position.

The idea behind Emerita Resources Corp and York Harbour Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.